Sales commissions - What percentage?
Discussion
Depends entirely on the product and expected total sales, and on the basic salary package.
If you're selling a trivial utility at £10.00 and have to sell 100,000 per year, its a different picture to a £10,000 package with 10 sales per year.
I've seen commission rates vary from 1-2% up to 50%...
If you're selling a trivial utility at £10.00 and have to sell 100,000 per year, its a different picture to a £10,000 package with 10 sales per year.
I've seen commission rates vary from 1-2% up to 50%...
Commission rates vary per company and product and worth of sale. Many variables.
But a pointer may be:
Set up a monthly target, be it revenue, profit or numbers shifted.
Then set up a ramped commission plan for your sales staff.
I don't know something like under 90% you get nowt. 90-99% you get 5% of renenue or whatever. 100% you get 10% of revenue. 110% you get 20% etc etc etc etc.
Obviously ignore my numbers, just in there to give an example.
But ramped commission can act as a good motivator, and allows you to easily track your staffs results.
But a pointer may be:
Set up a monthly target, be it revenue, profit or numbers shifted.
Then set up a ramped commission plan for your sales staff.
I don't know something like under 90% you get nowt. 90-99% you get 5% of renenue or whatever. 100% you get 10% of revenue. 110% you get 20% etc etc etc etc.
Obviously ignore my numbers, just in there to give an example.
But ramped commission can act as a good motivator, and allows you to easily track your staffs results.
Size Nine Elm said:
Depends entirely on the product and expected total sales, and on the basic salary package.
If you're selling a trivial utility at £10.00 and have to sell 100,000 per year, its a different picture to a £10,000 package with 10 sales per year.
It was just the second one but now it's both. Trying to sell 000's of £200 packages and 00's of £5000 systems. The basic salary is pretty low.
I am just wondering what % one of my salesmen should get and what % I myself should get as the Marketing/Sales manager.
What % should you get as the boss??
Well I would say, from experience, that you should be looking at a cumulative group commission for yourself, as well as your personal sales %.
Say you have 4 sales people, each with a target of 200 units. It is up to you to motivate your team to each acheive their targets. So they get good commssionon meeting or beating individual targets, and you get good commission should teh team as a whole meet target, ie 800 units are sold overall.
Well I would say, from experience, that you should be looking at a cumulative group commission for yourself, as well as your personal sales %.
Say you have 4 sales people, each with a target of 200 units. It is up to you to motivate your team to each acheive their targets. So they get good commssionon meeting or beating individual targets, and you get good commission should teh team as a whole meet target, ie 800 units are sold overall.
I joined the company last year as a graduate doing all the marketing and advertising. The company wasn't making any sales what-so-ever but now that I've brought inquiries up from one a month to more than two a day so we need to involve sales staff.
I have no idea what % a sales person should ask for and no idea what % I should get as someone helping the sales staff but not getting too stuck in. I was hoping to get 10%. I'm aiming for the team to bring in £120K in the next year and would find myself nicely motivated if there was a £12,000 cut in it for me.
edit: Thanks for the email Furby
>> Edited by dick dastardly on Tuesday 4th May 12:54
I have no idea what % a sales person should ask for and no idea what % I should get as someone helping the sales staff but not getting too stuck in. I was hoping to get 10%. I'm aiming for the team to bring in £120K in the next year and would find myself nicely motivated if there was a £12,000 cut in it for me.
edit: Thanks for the email Furby
>> Edited by dick dastardly on Tuesday 4th May 12:54
I would suggest you avoid paying a commission on turnover alone. We pay on Gross Profit achieved only.
Might not be possible in your line but I'd suggest you look at the feasibility.
That way your sales staff are incentivised to grow the business, not just shift more stuff - one doesn't necessarily lead to the other.
Might not be possible in your line but I'd suggest you look at the feasibility.
That way your sales staff are incentivised to grow the business, not just shift more stuff - one doesn't necessarily lead to the other.
Good point. I'm just trying to find out the basics at the moment as it's all completely new to me!
One other question I've got...What would happen if a sale was made to a consultancy/third party which resulted in many future sales. Is it usual for the salesman to only gat a cut of the initial sale or of all future transactions because it was he who landed it in the first place?
One other question I've got...What would happen if a sale was made to a consultancy/third party which resulted in many future sales. Is it usual for the salesman to only gat a cut of the initial sale or of all future transactions because it was he who landed it in the first place?
steviebee said:No, sales staff are employed to shift the product so should be commissioned on revenue. Sales managers & directors are employed to look at the management, profitability and growth of sales and so should be targeted on profitable growth. It obviously depends on how big your company is but commission and bonus should be tied to responsibility and accountability. If a sales guy has no influence over the product price and other factors affecting profit then it is wrong to commission him so. Rich...
I would suggest you avoid paying a commission on turnover alone. We pay on Gross Profit achieved only.
Might not be possible in your line but I'd suggest you look at the feasibility.
That way your sales staff are incentivised to grow the business, not just shift more stuff - one doesn't necessarily lead to the other.
Rich...RichB said:
I would suggest you avoid paying a commission on turnover alone. We pay on Gross Profit achieved only.
Might not be possible in your line but I'd suggest you look at the feasibility.
That way your sales staff are incentivised to grow the business, not just shift more stuff - one doesn't necessarily lead to the other.
No, sales staff are employed to shift the product so should be commissioned on revenue. Sales managers & directors are employed to look at the management, profitability and growth of sales and so should be targeted on profitable growth. It obviously depends on how big your company is but commission and bonus should be tied to responsibility and accountability. If a sales guy has no influence over the product price and other factors affecting profit then it is wrong to commission him so. Rich...
As I say, different business require a different approach.
Our sales guys get a basic based - very roughly - on 10% of anticipated / target turnover. Their bonus comes from the gross profit.
This is print/design/etc - an industry notrorious for sales people "buying" work to reach targets.
The system works for us!
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